The Central Board of Indirect Taxes and Customs (CBIC) has reinstated a 10% import duty on laboratory chemicals, modifying an earlier duty hike announced in the FY25 Union Budget to curb tax evasion. This concessional rate will apply only to genuine users who declare the intended end use of the imported chemicals. Importers failing to meet this requirement will be ineligible for the lower duty rate.
Conditions & Exemptions
🔹 The 10% duty applies to chemicals imported for laboratory use, provided importers submit an end-use declaration.
🔹 Undenatured ethyl alcohol, which is subject to 150% import duty, has been excluded from this concessional rate to prevent misuse.
🔹 Importers cannot resell or trade these chemicals, and any violation will result in losing the concessional benefit.
🔹 These changes will take effect from August 1, 2024.
Background & Industry Concerns
Laboratory chemicals—critical for scientific research and development—are typically imported in small quantities, categorized under a special tariff classification with duties ranging between 2.5% and 10%. However, some importers misclassified undenatured ethyl alcohol as lab chemicals to evade the 150% duty. To prevent such misuse, the Union Budget initially raised the duty on lab chemicals to 150%, triggering concerns across the scientific community.
The sudden hike led to strong opposition from researchers, as it significantly increased costs. Scientists estimated that a chemical previously priced at ₹1,00,000 could now cost ₹2,50,000 due to the higher duty. This sparked widespread discussion, with concerns about its impact on scientific research funding and the availability of critical reagents.
Following industry feedback, the government revised the tariff structure, restoring the 10% duty while keeping strict compliance measures in place to prevent misuse.
Scientific Community’s Response & Future Outlook
Leading researchers and institutions welcomed the revision but emphasized the need for clearer exemptions for chemicals essential to R&D. The Department of Biotechnology acknowledged the issue and assured that a resolution was underway. Additionally, publicly funded research organizations with DSIR certification remain exempt from customs duties until March 2029, providing relief to government-backed scientific institutions.
While this revision partially addresses industry concerns, experts continue to seek more streamlined policies to support scientific research without compromising revenue collection and regulatory oversight.
